Minimum wage incomes

Just done some quick calculations on what someone on the minimum wage would have in terms of real take home pay today, as opposed to six years ago.

The gross minimum wage has increased 19%.

However tax has been reduced, so despite earning 19% more income, they are now paying 14% less tax.

The ACC rate is slightly higher today than in 2008 (when ACC was near insolvent) so that has gone up. Hopefully next year will drop again.

The net income of a fulltime minimum wage earner is 27% higher than six years ago.

The key thing is how have costs risen during the period. And the good thing is that even with the GST increase the cost of living only increased 14% in six years, so a minimum wage earner has had an 11% increase in their real disposable income in that period.

virtualmark

My problem is this is the sort of analysis that should be being done by the mainstream media. Instead, in today’s brain-damaged media market, we have to rely on a blogger to crunch the numbers because the media are too busy re-printing press releases and hyperventilating about the latest celebrity dramas.

hemihua

I don’t know about including GST. Tax on income is clearly defined. Things get murky when you start including GST – should you also include say the portion of tax on your good / service that goes towards company tax? As technically this is being passed on to the consumer too.

NoCash

martinh

If cost of living has only gone up 14% in six years incl the gst rise that means 8% over six years is what my costs have gone up by without the gst rise.
Well in my case thats certainly not whats happened. My electricity is up heaps, same with rego, milk, lots of my groceries and the cost of housing has gone up a hell of a lot more which means peoples main cost is rising much more than 8% over 6 years. I just dont believe it.

ID imagine that the basket of goods for CPi just dont accurately reflect my spend which is mostly on staples for me and my kids

I did read it, and I know he took GST into account, but my point is that when you earn the minimum wage you need to spend everything you have to live – so percentage wise (of your total income) you pay more GST than those who for example, only have to spend 50% of their income to live.

In short, you can play with the figures all you like, but those people who are struggling more to make ends meet now, than they were a few years back, will not be convinced – especially when they don’t have 11% of their income left over each week – like the ‘illusion’ claims they should have.

The real test is, are people who are still purchasing the same things, living in the same houses, using the same transport, electricity and so on, left with 11% of their income each week – if they aren’t, then DPF has just wasted his entire afternoon, because his figures mean diddly squat in the big picture!

martinh

Gump
Yep me too on that, and broadband prices,
Beer prices have gone beserk, thats the govt fault.
Now parking is going up as Len trys to shunt us on to his overpriced steel track scheme.
Whats the bet those over priced construction companies will be donating to him.
Maybe the same bastards that ruined Mangawhai ratepayers by getting a state of the art system developed that wasnt needed

alloytoo

I am paying a lot less for my mobile phone these days and that makes me very happy (the bill has gone from $150 per month to $43 per month in less than a year).

Perfect example – your cell phone costs have come down – whilst milk has risen significantly – NOW which one do we need to live? (okay, yes you can live without milk – but I’m sure you’ll work out the point).

Still makes no difference sweetie. When a person has to spend everything they have, to purchase/pay for the same things they had to pay for in 2008, and not have 11% of their income left over – then all the figures in the world ain’t going to win any votes.

People know when they are being conned. And trying to convince them that they are 11% better off, than they were back then, is only going to work, if they actually can see that 11%.

If I was the government, I actually wouldn’t try to make too bigger thing of that 11% because I think all it would do is make some people question why they can’t notice any difference.

Kimble

Judith people wont see that they are 11% better off, because off all the people like you telling them they aren’t. Telling them they are so much worse off. Telling them that they can only get better off by having people take money from other people to give to them.

And you simply refuse to believe that the people on minimum wage can EVER be better off. EVER.

Captain Pugwash

Thats $482.10 in the hand per week & my mortgage is over $500 per week! BTW have just been informed by spoiled step daughters who claim I’m a tightass when it comes to pocket money, because like, you know, all other kids, get at least $1000 per month pocket money, some get almost $2000! I’m thinking they might be in for a shock when they start work.

Bill Courtney

DPF: “…so a minimum wage earner has had an 11% increase in their real disposable income in that period”.

But it’s still nowhere near enough to live off! That’s the whole point about the “squeezed middle”. These people are not beneficiaries, they are putting in a full 40 hour working week but won’t feel that they have had an “11% increase” in their real disposable income.

Try living in Auckland, paying off a mortgage on the average South Auckland house and then feeding your dependents. Do you think there’s going to be much left over from less than $500 per week?

All_on_Red

Kimble

Have you ever met me? Have you ever asked me whether I believe the things you’ve suggested or not?

When faced with evidence of an improvement in the income of people on the minimum wage, you have contorted yourself to find some way to deny it, and then subsequently have dismissed every rebuttal of your pessimism.

martinh

Your statements weren’t worth answering when you peppered them with assumptions that you knew about the conversations I have and what I believe.

It was hard to get past the ‘this guy is a fuckwit’ to even think about answering the rest of what you said. A stereo type of what – someone that doesn’t believe the same as you do? Interesting stereotype !

goldnkiwi

Kimble

Try living in Auckland, paying off a mortgage on the average South Auckland house and then feeding your dependents. Do you think there’s going to be much left over from less than $500 per week?

Apparently Auckland is the only place there are jobs and living there is only allowed if you are buying property.

Let me paraphrase:

Try choosing to live in one of the most expensive places on Earth and investing in one of the most over-priced property markets too boot, as well as feeding your kids which I have placed third for some reason!

A mortgage isn’t the cost of housing. A mortgage is the cost of housing PLUS investment. Not feeding your kids because of your mortgage is the same as not feeding your kids because your hedge fund investments aren’t as liquid as cash.

However tax has been reduced, so despite earning 19% more income, they are now paying 14% less tax.

They’re paying less income tax. The smartarses in government replaced the income tax with GST, so they could claim to have reduced income tax without having to endure the inconvenience of less money coming in. If you’re on minimum wage, the amount of tax you’re paying isn’t significantly less than it was in 2008.

Kimble

Martin Gibson

Good start! Now shrink that bloated public sector (starting with the ministry of women’s affairs) and the resultant ridiculous tax rates. Restore waterways using excess labour currently paid to watch tv and commit crime. Get prisoners to grow trees and sort society’s waste so it can be reused or sold. Make sure all kids are numerate and literate after the thousands spent on their education. Stop taking money off productive people to give to the feckless women who breed fetal alcohol spectrum disorder babies with nameless sperm donors and things will keep getting better.

EAD

EAD

@ Kimble – inflation is a very simple concept to understand: More money (currency debasement) = less value. It may seem contradictory but it’s a very straightforward concept.

The CPI measure which DPF has used is an attempt to measure how much prices have risen as a result of the currency debasement. The Department of Stats use all sorts of statistical tricks to make their number appear low such as:
hedonistic adjustment – a computer with twice as much power as a result of technological improvements means prices have come down even if they have risen
substitution – you can substitute steak for dog food
re-basketing of goods – if the price of one good has risen too much, then just take it out of the basket
non-reflective weightings – because we can all eat colour TVs and mobile phones

@ One Track – you ask for some figures. I’ve gone to the RBNZ site and pulled the figures from here http://www.rbnz.govt.nz/statistics/tables/c1/ and the M3 money figures have risen in the last 6 years from 163 billion to 237 billion which off the top of my head is about a 45% rise in 6 years but hey, don’t let the facts get in the way of a good pro National puff piece (NB: I used to be big National fan until I took the time to do some independent research and learn’t to ignore press releases).

The universal truth as can be seen from above i that there are lies, damned lies and government statistics. This present social democrat National government inherited an addiction to fiddled and selective interpretation of inflation and growth figures, having found that the media is not interested or mentally capable of stripping down the raw numbers to arrive at the truth. The National Government has happily supplied and increasingly made up sets of numbers and shrouded them in phrases like “zero-budgets” to palm off onto pleb land. If you think government debt is large wait until it hits one hundred billion or even two.

It’s a new version of the Soviet grain harvest/traktor production report has been created, and its mostly simply made up fantasy. At what point did government make the conscious decision to begin lying?

What really pisses me off is that National are doing it on purpose, because it is politically easier that taking the tough decisions needed to get this country’s finances in order.

freemark

Of course everyone seems to convincingly forget that anyone anywhere near the minimum wage is paying no income tax in the main, and will often be getting extra help via wff etc. And I agree that Judith is just a full of shit troll.

Kimble

if the price of one good has risen too much, then just take it out of the basket

So if petrol increased in price by a factor of 10 you think they would just remove it from the basket altogether?

At most they might reduce its weight in the basket to reflect the inevitable reduction in consumption.

CPI is supposed to measure the GENERAL increase in the price level. If something is an obvious outlier (chickens become more expensive than gold, but turkeys dont) then it is not reflective of the general price levels.

because we can all eat colour TVs and mobile phones

We do consume them. Whats the problem?

All you have done is confirm you dont know what the CPI is and that you are in no fucking position to think you can lecture me about it.

However tax has been reduced, so despite earning 19% more income, they are now paying 14% less tax.

They’re paying less income tax. The smartarses in government replaced the income tax with GST, so they could claim to have reduced income tax without having to endure the inconvenience of less money coming in. If you’re on minimum wage, the amount of tax you’re paying isn’t significantly less than it was in 2008.
==========
and add to this all the stealth taxes like ACC, road and petrol taxes, collections for this and that like the electricity Levy and so on. extra rates where rates have increased on less services and the measure above are just bullshit like most statistical lies.
Oh and increased school fees car rego , the list is endless.
and its all going to get worse once or start studded dollar starts to fall.

SPC

For those on the MW the cost of living is based around the cost of rent, power, food and mobile phone/Internet (Sky would probably be unaffordable and some use PT rather than cars/petrol). For those on the MW and beneficiaries the official cost of living (an average including new cars and electronics and impacted by the dollar value) is not that relevant. We need a narrower necessities index to assess the change in cost circumstance of those on benefits and the MW.

Rent change is the one with greatest impact. A GST rise would be secondary.

Thus when major change in rents occur there needs to be a review of an areas Accommodation Supplement level – Christchurch should have already been increased to the Wellington rate – at least till the rebuild is completed.

For those with families there is the WFF (major impact level of Accommodation Supplement access and the GST on the children’s clothes and food spending), but then many argue only the young are on MW.

The governments position could be strengthened if they backed improvements being required for rental housing and the AS change in Christichurch.